Just world research has shown that observers derogate victims more for their misfortunes if the perpetrator is not harshly punished (Lerner in J Personal Soc Psychol 1(4):355–360, 1980). However, few studies have investigated minority group derogation as a just world preservation strategy after instances of intergroup harm-doing. This study is among the first to demonstrate the derogation of both individual victims and of the victim’s minority group experimentally, using the context of a racist hate crime in Australia. In the present experiment, participants (N = 110) read a news article describing a hate crime against an Aboriginal Australian teenager and were informed that the perpetrator was harshly or leniently punished (secure vs. justice threat condition). Our results show that in the justice threat condition, participants not only derogated the individual Aboriginal Australian victim more after his death, they also expressed greater racism toward the victim’s group. An indirect effect of the justice threat condition on modern racism via individual victim derogation was observed, along with moderating effects of individual differences in belief in a just world. These findings provide support for the alarming hypothesis that racist hate crimes are not only the manifestation of a racist society, but may also bolster racial prejudices if leniently treated. The results highlight the important role of political and judicial authorities, whose response or non-response to a hate crime can exacerbate or ameliorate existing prejudices.

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